EU new whipping boy of anti-subsidy groups

Forrest Laws Farm Press Editorial Staff | Nov 04, 2005

U.S. farm organizations are calling on the European Union to respond to a U.S. proposal calling for a 60-percent reduction in domestic support programs to help get the Doha Development Round back on track.

Members of the AgTrade Coalition, a group of 39 farm and farm-related groups, circulated a statement expressing their disappointment over the lack of progress on market access in the latest round of agricultural meetings at the World Trade Organization in Geneva.

Negotiators are supposed to be finalizing a new trade agreement for approval by the WTO at a ministerial meeting scheduled in Hong Kong in mid-December, but the talks have become stalled over market access issues, according to observers.

The U.S. proposal tabled by Trade Representative Rob Portman on Oct. 10 would require the United States to cut its domestic price supports by 60 percent and the European Union and Japan by 83 percent (because the latter have much higher agricultural subsidies than the United States).

The U.S. plan also includes a cap on tariffs of 75 percent and progressive cuts with the highest tariffs being reduced by 90 percent. EU negotiators have had little to say about the U.S. offer, in part, because EU tariffs average around 62 percent compared to 12 percent for the United States.

“We are pleased that the United States and other countries have called upon the European Union to give further consideration to its position and to return this week with a more ambitious proposal,” the AgTrade Coalition said. “Indications from the European Union that any further proposals it might submit will include new demands (geographical initiatives, etc.) rather than further concessions are unacceptable.”

Coalition members, such as the American Farm Bureau Federation, have been making their views on the lack of progress in the Doha Round known to Congress and the Bush administration.

“A final agreement on tariffs must result in significant percentage reductions that result in commercially meaningful access,” said Craig Lang, president of the Iowa Farm Bureau and a member of the American Farm Bureau's board of directors.

“I'm certain the American farm and ranch community can be competitive in a global market. I'm confident of this, but only if we have fair and unrestricted access to markets we've been denied in the past because of unfair trade barriers,” Lang told members of a Senate finance subcommittee at a hearing in Washington.

U.S. farmers are under no illusions about the consequences of the U.S. proposal, he said. “The recent U.S. proposals would cut domestic support allowances to a level that would create economic challenges for some commodities and farm types,” Lang said. “In the long term, U.S. agriculture will overcome these challenges through the expanded opportunity for exports created by specific and measurable improvements in market access.”

Representatives of the National Corn Growers Association delivered the same message to Portman in a meeting at the U.S. Trade Representative's office.

“We said we appreciated the opportunity to discuss the expanded opportunities for the use of U.S. corn and products made from corn in the global market, both now and in the future,” said NCGA President Gerald Tumbleson. “At the same time, we emphasized the importance of having a continued safety net for corn growers.”

Tumbleson and NCGA Chairman Leon Corzine pointed out to Portman that the United States needs to keep an eye to the future when holding its trade talks with other countries.

“We had a good discussion about the future,” Corzine said. “We were able to talk about the value-added products on the horizon, products that will benefit everyone. And it is essential that corn growers have access to markets to sell these new products.”

“We left the meeting with the strong feeling that the ambassador has a clear understanding of our position and that he is unwilling to exchange something for nothing,” said Tumbleson.

The unusual silence on the part of the European Union appears to be due to France's reluctance to give up any more of the ample domestic price supports and tariff protection the EU provides its farmers.

The French, whose farm sector receives the lion's share of those subsidies, have been leading an effort by 12 EU countries to force its governing body to submit any Doha Round proposals to a review committee of EU agricultural experts. The countries have also criticized Peter Mandelson, the EU's chief WTO negotiator.

Catherine Colonna, France's European affairs minister, was quoted as saying that the Doha Round would fail if Mandelson overstepped the negotiating mandate conferred upon him by EU governments.

French President Jacques Chirac said it was time for other trading powers to make concessions although the EU has yet to come forward with a counter offer to the U.S. reduction proposals.

EU officials claim that Europe took the first step in reducing farm subsidies in its 2003 reform of its Common Agriculture Policy. France and other countries say that proposals already made by Mandelson would force the EU to revise the CAP again.

The EU's lack of response to the U.S. proposals has put the former in the unusual position of being the “whipping boy” for organizations that normally are attempting to tar and feather the United States for its sins in the world trade arena.

The New York Times, noting in an editorial in its Oct. 26 editions that a “typical” cow in the European Union receives a government subsidy of $2.20 per day, blamed Europe for the delays in the talks.

“Given all the noise the British prime minister, Tony Blair, and his European colleagues have made about the need to ‘make poverty history,’ you would think that the Europeans would jump at the American proposal,” the newspaper said. “Think again. In Europe, farmers are apparently terrified of having to compete without the government around to hold their hands.

“So the European Union has not only not made a meaningful counteroffer, but France — the worst of a bad lot — is also doing everything it can to get in the way of even the anemic talk of compromise from the European Union's trade chief, Peter Mandelson.”

The Times said it was not willing to let the U.S. government “entirely off the hook. The lawmakers in Congress who coddle rich American corporate farmers — often to the detriment of small family farmers — are not helping things.”

The Times noted the Senate Agriculture Committee's recent passage of a budget reconciliation bill that maintains most of the provisions of the 2002 farm bill and extends the base line spending for the programs through 2011.